"Department of Industrial Engineering and Economics Working Paper 2016-6" is now available
Department of Industrial Engineering and Economics Working Paper 2016-6
Department of Industrial Engineering and Economics issues the series of Working Paper to highlight our recent research activities.
The latest issue, 2016-6: Ryo Arawatari, Takeo Hori, Kazuo Mino. On the Nonlinear Relationship between Inflation and Growth: A Theoretical Exposition.
- Title of original paper
- On the Nonlinear Relationship between Inflation and Growth: A Theoretical Exposition
- Ryo Arawatari, Nagoya University
Takeo Hori, Tokyo Institute of Technology
Kazuo Mino, Doshisya University
- This study introduces cash-in-advance constraints into an R&D-based model of endogenous growth in which agents' abilities to develop new goods are heterogeneous. We demonstrate that the negative effect of inflation on long-term growth is weaker in the heterogeneous ability economy than in the homogeneous ability economy if the inflation rate is relatively low, whereas the opposite outcome holds in the high inflation regime. Our numerical examples show that the threshold level of inflation is about 20% per year, which fits well with the findings of existing empirical studies of the nonlinear relation between inflation and growth.
Following issues of Working Paper will appear as soon as available.